As widespread labour shortages force Canadian companies to re-evaluate their employee recruitment and retention practices, experts say pay transparency is increasingly in the spotlight.
Outside of the public sector and unionized shops, salaries in North America have long been considered a private matter between employer and employee. Job postings generally don’t disclose compensation and the issue of money usually doesn’t come up until the interview stage or even later.
But a growing number of advocates say that needs to change, in part to address problems of gender and racial equity, but also to keep talented employees in the workforce.
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“I have every intention of telling my kids years from now that there was once a time when you’d apply for a job and have no idea what it paid,” says Allison Venditti, founder of Moms at Work, a Canadian-based organization that advocates for women in the workforce. “And they will think that’s ridiculous.”
Moms At Work has launched an online job board, which requires all job postings to fully disclose the salary range for the position. Venditti says the job board is needed because pay transparency is one way to address society’s wage gap problem. “Women and people of colour are underpaid substantially. We know this. We’ve been talking about the wage gap since forever and a day and this is one of the fastest ways to help fix that.”
Some jurisdictions are getting on board the pay transparency bandwagon. In the U.S., the state of Colorado has a law that requires employers to clearly state salary ranges in all open job postings. A similar mandate will come into effect in New York City this spring. And the European Union announced last March it was imposing new rules to make pay levels public in order to make it easier for women to challenge wage imbalances and close the gender pay gap.
Read: Canadian women earned 23% less than men in 2020: report
Meanwhile, the Canadian government passed the Pay Equity Act last year, which will eventually require all federally regulated workplaces with 100 employees or more to publicly disclose wage gap data for women, Indigenous people, persons with disabilities and members of visible minorities.
“It is something companies are going to have to start preparing for,” says Laura Machan, recruitment partner at the Toronto office of LHH, a global human resources firm. “Partly because governments, both federal and provincial, are starting to require it and partly because it’s part of their ESG goals with their board, to be a better corporate citizen.”
Read: New pay equity legislation aiming to close gender wage gap
But the issue is a complicated one, she says. Many companies can’t just start posting salary ranges without doing a lot of in-house work first. “Imagine if one of your long-term, highly regarded employees saw a job posting for their job that was 10 per cent higher than what they make. I think there’s a lot of work to do to ensure in-house pay frameworks are equitable before you get to the job posting part.”
The non-profit organization FoodShare Toronto is one employer that already discloses salaries on its job postings. Katie German, FoodShare’s director of advocacy and programs, says the organization has seen a steady uptick in job applicants since it adopted the policy.
“We actually have a policy that we don’t negotiate on salary. But we’re also a living wage employer, in that no one working here earns less than $24 an hour. I think one reason many employers don’t have pay transparency is because they know they pay too little. If you’re embarrassed to post your salary range, that’s a clear sign that you need to do better.”
Jen Aitchison of Sutton, Ont., says she quit a job in the insurance industry after finding out over after-work drinks that she made 30 per cent less than a male colleague who was newer to the organization than she was. The revelation made her feel disrespected and unappreciated. “People say, ‘Oh, women are bad at negotiating,’ but I don’t think that’s true. If people don’t know what the table stakes are, then they just get taken advantage of by the corporation.”
Read: EU implementing new pay transparency rules to help close gender wage gap
For her part, Aitchison believes there’s a business case to be made for greater corporate transparency around compensation — especially now, as companies compete for talent amid widespread labour shortages.
“Companies need to know that eventually, that employee who’s worked for them for 10 years is going to find out that Joe, the new guy, is making $20,000 more than she is. And she just may leave. This notion many women have of ‘I have to leave to get paid my value’ is hurting organizations more than they know.”